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GalinKa [24]
3 years ago
14

An asset is purchased on January 1 for $44,700. It is expected to have a useful life of five years after which it will have an e

xpected residual value of $6,000. The company uses the straight-line method. If it is sold for $32,000 exactly two years after it is purchased, the company will record a: Multiple Choice
Business
1 answer:
Black_prince [1.1K]3 years ago
5 0

Answer:

Gain of $2,780

Explanation:

Calculation to determine what The company will record If it is sold for $32,000 exactly two years after it is purchased

First step is to calculate the Annual depreciation expense using this formula

Annual depreciation expense = (Cost − Residual value) × (1 ÷ Useful life)

Let plug in the formula

Annual depreciation expense = ($44,700 − $6,000) × (1 ÷ 5)

Annual depreciation expense =$38,700× (1 ÷ 5)

Annual depreciation expense =$ 7,740

Second step is to calculate the Accumulated depreciation using this formula

Accumulated depreciation = Year 1 depreciation expense + Year 2 depreciation expense

Let plug in the formula

Accumulated depreciation = $7,740 +$7,740

Accumulated depreciation = $15,480

Now let calculate the Gain (loss) on disposal

Using this formula

Gain (loss) on disposal = Proceeds from sale − (Cost − Accumulated Depreciation at time of sale)

Let plug in the formula

Gain (loss) on disposal = $32,000 − ($44,700 − $15,480)

Gain (loss) on disposal =$32,000-$29,220

Gain (loss) on disposal=$2,780

Therefore If it is sold for $32,000 exactly two years after it is purchased, the company will record a GAIN of $2,780

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<u>Answer:</u> The amounts have to be determined using fair value for plant and equipment and for long term debt.

<u>Explanation:</u>

Fair value method is based on the market price of the asset. The historical value of the assets is not used to consider the sale price of the asset. Fair value is where Company J and Company K both the parties have to accept the price based on the known facts of the assets.

Company J and Company K should both accept the price out of free will and should not be out of compulsion. Company J can report based on the financial statement fair value of the assets and long term debt.

4 0
3 years ago
Any restructuring of operations that ____ the difference between a foreign currency's inflows and outflows may ____ economic exp
zvonat [6]

Answer:

The correct answer is c. reduces; reduce.

Explanation:

Economic exposure is a type of exposure to exchange rate risk caused by the effect of unexpected currency fluctuations on a company's cash flows, foreign investment, and future earnings.

Economic exposure, also known as operating exposure, can have a substantial impact on a company's market value, as it has far-reaching effects and is long-term in nature. Companies can protect themselves against unexpected currency fluctuations by investing in currency markets (FX).

Unlike transaction exposure and conversion exposure (the other two types of currency exposure), economic exposure is difficult to measure accurately and therefore difficult to hedge. Economic exposure is also relatively difficult to hedge because it faces unexpected changes in exchange rates, unlike expected changes in exchange rates, which form the basis of companies' budget forecasts.

5 0
3 years ago
16. Demographics are
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Answer:

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Explanation:

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7 0
3 years ago
Future Value of Annuity. Twins Jessica andJoshua, both 25, graduated from college andbegan working in the family restaurant busi
pav-90 [236]

Answer:

Jessica will have $611,816.70 at retirement.

Explanation:

a) Data and Calculations:

Jessica:

Annual contribution in IRA for 10 years = $2,000

Retirement age = 65 years

Interest rate per year = 10%

Annuity value for investing $2,000 annually is $35,062.33

FV (Future Value) $35,062.33

PV (Present Value) $13,518.05

N (Number of Periods) 10.000

I/Y (Interest Rate) 10.000%

PMT (Periodic Payment) $2,000.00

Starting Investment $0.00

Total Principal $20,000.00

Total Interest $15,062.33

Amount received after investing $35,062.33 for 30 years.

Using an online finance calculator:

FV (Future Value) $611,816.70

PV (Present Value) $35,062.33

N (Number of Periods) 30.000

I/Y (Interest Rate) 10.000%

PMT (Periodic Payment) $0.00

Starting Investment $35,062.33

Total Principal $35,062.33

Total Interest $576,754.37

7 0
2 years ago
A small craft store located in a kiosk expects to generate annual cash flows of $6,800 for the next three years. At the end of t
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Answer:

The monetary value is $24,201.23

Explanation:

Giving the following information:

Cash flows:

Year 1= $6,800

Year 2= 6,800

Year 3= 6,800

Year 4= $15,000.

The discount rate is 15 percent.

We need to discount each cash flow to the present value:

PV= FV/(1+i)^n

Year 1= 6,800/1.15= 5,913.04

Year 2= 6,800/1.15^2= 5,141.78

Year 3= 6,800/1.15^3= 4,471.11

Year 4= 15,000/ 1.15^4= 8,576.30

Total= $24,201.23

6 0
3 years ago
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